Steel products group Cookson delivered better half-year numbers than analysts were predicting although investors seemingly continue to discount the group's ability to achieve its ambitious 2013 targets. The company's goals are a return on sales margin of 12 per cent and double-digit earnings growth that would lift EPS to around 90p. Notwithstanding possible market doubts, with the group expecting a marginally stronger second half - driven by normal seasonal demand strengthening in electronics - chief executive Nick Salmon anticipates the full year to come in above expectations.
Cookson's performance in the latest six-month period was boosted by strong demand for steel production, foundry castings and electronics, and continued investment in production capacity in key developing markets. With selling prices lagging higher-than-expected raw material costs, return on sales in the ceramics division declined from 11.8 per cent to 11.6 per cent, although return on sales overall increased from 9.8 per cent to 10.3 per cent.
For the full year, the group expects mid single-digit growth in global steel production, slightly higher growth in electronic equipment production and double-digit growth in the foundry castings end-market. Evolution Securities sees scope to raise its full year EPS estimate from 72p to 74-75p (2010: 61.5p).
| COOKSON (CKSN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 601p | MARKET VALUE: | £1.66bn | |
| TOUCH: | 600-601p | 12-MONTH HIGH: | 738p | LOW: 407p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 484p* | NET DEBT: | 31% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 1.23 | 93 | 23.4 | nil |
| 2011 | 1.42 | 120 | 31.6 | 7.25 |
| % change | +15 | +29 | +35 | - |
Ex-div: 14 Sep Payment: 17 Oct *Includes intangible assets of £1.13bn, or 410p a square | ||||
